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© 2013 Free State of Amsterdam
Read on Bloomberg.com of 24 May 2016:
In ‘Urban Living Becomes a Luxury Good’ of 24 May, Justin Fox of Bloomberg described how after the financial crisis Americans are flooding the city centres of the biggest cities. The suburbs are still there, but something fundamental has changed. Increase in employment in downtown areas of US metropolitan areas is as big as jobs growth in the urban periphery, but on the housing market downtown is the real winner. True, the share of Americans living in suburbs has continued to grow, but at the same time the real estate prices in the city centres have flipped. Both phenomena are linked to each other. The farther from downtown, housing prices steeply drop. Rich Americans now chose to live in downtown areas, which means a fundamental shift in living preferences. Fox: “The shift toward urban living was also most pronounced among whites, the highly educated and the 34 to 49 cohort.” Which means, Fox adds, that urban living is becoming a luxury good, a thing many Americans can no longer afford.
Fox’ conclusion is the cities must put up a lot more buildings in or near the city centres. Let me add that the same holds for European cities like Amsterdam. It reminded me of the contribution of MVRDV for the ‘Grand Paris’ competition of the French president Sarkozy in 2009 (picture). In ‘Paris Plus Petit’, the Dutch architects advocated more ambition, more optimism, more density, more efficiency, more ecology and more compactness. “Greater Paris needs a strong combination of responsibility and ambition to continue its development, to ensure its consistency and to develop a cohesion that can build a base for a collective enterprise to solve its problems, to enlarge its presence and attractiveness, to create an even more remarkable, exemplary city.” In Paris, after the competition the city chose for densifying the periphery by extending the regional metro-system, not for densification per se. In Amsterdam we should though.
Read in ‘Ghost Cities of China’ (2015) of Wade Shepard:
People are complaining about the steeply rising housing prices in Amsterdam. They know it’s nothing compared to cities like London, New York City and even San Francisco, which are much worse. Do they know that housing prices in the Chinese cities are the highest in the world? According to the IMF’s house price-to-wage ratio, China’s big cities are, relatively speaking, some of the most expensive in the world in which to buy real estate. The ratio measures median housing prices in relation to median disposable income to calculate the minimum amount of time it would take for an average resident to pay for a property. In ‘Ghost Cities of China’, Wade Shepard explains why. Commodity houses in China are free-market properties that can be bought and sold at will, prices are not capped by the Chinese government. “According to this evaluation method, China, including Hong Kong, has seven out of the world’s top ten most expensive cities for residential property.” In Beijing, it would take 22.3 years to buy a property, in Shanghai 15.9 years. That is twice as high as in Tokyo, three times higher than in London, and four times higher than in New York City.
Fifteen years ago property developers didn’t exist in China. Prior to 1988 land transactions were even not permitted. Shepard explains how the Chinese government has created a market for real estate in the mid nineties. Two years later the Chinese private housing market exploded. “As could be expected, prices surged.” By 2010 its property market was already the largest in the world. In four years time the cost of real estate in China tripled. In 2012 alone people in China spent over US$1 trillion on real estate. The Chinese love real estate, they want property. The house is now the main indicator of status. ‘No house, no wife’, they say. It’s not a bubble, Shepard stresses; the demand is real. China has one of the highest home ownership rates in the world. The faith that the Chinese have in the value of housing is unflappable. Other viable financial options for investing money are extremely risky. That makes the Chinese into the greatest city builders of the world. So the West better stop complaining. Build cities. Look East!
Read in The Economist of 26 September 2015:
Something’s badly wrong. On my way back from the UK, I read an article in this week’s edition of The Economist on the booming housing market in and around London. Despite stagnant incomes, Britons have taken on masses of cheap debt. All this demand has run up against ‘sluggish supply’. People think foreign ownership of London real estate is the problem. It is not. That problem concerns only certain parts of inner London. Demand from within Britain exerts much bigger effects, according to The Economist. The magazine thinks this is partly due to strict planning laws. Green belts are protecting the landscape around cities; these belts now cover 13 per cent of England. How sacred are they? The conservative government wants to get rid of those planning schemes and, by doing this, make it easier to build. The Economist thinks cheap debt is not the problem, but spatial planning. The magazine quotes Paul Cheshire of the London School of Economics, who thinks London could build another 1,6 million houses in the Green Belt around the capital city. The magazine agrees, because much green-belt land “is far from green”.
So that’s the end of planning, even though everybody knows that when planning permission is forthcoming, housebuilders have held back. Why? Because builders try to sell new-builds at a price in the upper decile of those prevailing in the local market. “Since coming to power in 2010 the Conservative government has done more to boost demand for housing than increase its supply. Labour, meanwhile, talks about rent controls, which could flatten supply still further.” While reading this, I had to think of the recent study of Greg Clark, senior fellow of the Urban Land Institute, who gave a lecture in Amsterdam last week on the lack of density in our cities. In ‘Density: drivers, dividends and debates’ (2015) he demonstrates the great value of density, “to advocate for the best practices that can produce it, to bust the myths, and to start the process of informing and supporting new leaders to put density at the heart of long term planning for the future.” We should densify our cities now! Would be a great read for the editors of The Economist.
Read in The Argus of 24 September 2015:
Samer Bagaeen, teaching planning at the University of Brighton, showed me the local newspaper. In The Argus of last Thursday there were at least three pages on new high-rise initiatives in Brighton, UK. In ‘Building upwards is the way to go to meet housing crisis – but it can still look good’, Bagaeen is interviewed on the local housing crisis. He is one of the experts telling the readers that ‘the only way to go is up’. Geoffrey Mead of the University of Sussex adds: “The Dutch put something like five times as many people in their cities.” Some seven years ago the American architect Frank Gehry proposed a series of new tower blocks near the waterfront, worth 300 million pounds, but because of the financial crisis nothing came out of it. Bagaeen thinks projects like these are still needed. Brighton, south of London, is growing fast. There is no land for extension, but people need affordable housing. There are more than 20.000 households on the city council’s waiting list and an estimated housing need of 24.000. Brighton should be densified.
Brighton is a city of 250.000 inhabitants on the South coast of England, not far from London. The coastal region has beauty, the climate is gentle, everything looks nice. In many ways Brighton is a small version of the British capital city: low density, large parks, attractive neigborhoods, and a booming economy. You might compare it to Haarlem near Amsterdam. As a touristic beach resort it is transforming itself into a creative high-tech hub. Lots of people have moved from expensive London to Brighton, many are commuters now, the housing market is overheated, traffic congestion on the roads to London is an issue. Brighton, experts say, should densify. At the ‘Connect’ conference, organized by Austen Hunter and Jenni Lloyd, some eighty citizens focused, instead, on the identity of Brighton. They asked me to give a lecture. The outcome? Brighton’s identity should not get lost. But there is room for improvement. Many things can be done. People are willing to help. Let them. Connect them. Empower them.
Read in Het Parool of 1 August 2015:
So we spent a week in London. We booked an Airbnb in Hampstead Heath, London North. An excellent appartment, though rather small compared to Dutch standards. We met friends, all living in London now. Why did they chose for London? Because, they said, here are the jobs. Sure, they admitted, London is an expensive city. Even for a small dwelling you have to pay a fortune. The average housing price in London is 650.000 euro now. You have to earn at least 100.000 euro a year if you want to buy one. But there are lots of opportunities. And don’t forget all the amenities. Dutch newspapers love to write about ‘ghost streets’ in Kensington and Mayfair, where billionaires buy real estate from paper, without seeing it. The Amsterdam based newspaper Het Parool even headed ‘Londen staat leeg’ (‘London is vacant’), which is nonsense of course. In reality, London is heading for a population of 10 million inhabitants. In 2040 Great Britain will have a bigger population than Germany.The newspaper quoted David Galman, director of the new Maintower on Canary Wharf. All appartments in his tower were being sold without mortgage. Buyers came from China, the Middle East, India and Greece. “It proofs that the world puts trust in the housing market of London.” But the Dutch prefer their small cities with their cheap houses.
The London housing market is overheated, for sure. The situation fits in a global pattern. Cities are back on stage again, but certainly not all cities. Many are shrinking, becoming cheaper (which is a problem in itself). But all successful cities, worldwide: Sydney, San Francisco, London, Paris, Moscow, Beijing, New York, Amsterdam, are fighting against a lack of affordable houses. If you want to live in one of those dream cities, you will have to earn a lot of money nowadays. What is happening in Mayfair and Belgrave is exceptional though. Rich people are speculating there with (exceptional) real estate. The task of local government is making developers to build as many houses as possible in a very dense setting and providing mass transit all over the place. This will reduce the average price and will keep people coming. London is not a densely built city at all. I had a look at Nine Elms, Old Street, Battersea, Canary Wharf. Highrise is coming to town.
Read in NRC Handelsblad of 16 May 2015:
Both correspondents of NRC Handelsblad in the Far East, Oscar Garschagen (China) and Melle Garschagen (Australia), wrote two articles on the real estate market in Sydney, Australia. Last year, Chinese investors spent 12 billion Australian dollars on real estate in the ‘country of land and rocks’, mostly in Sydney. Four years ago it was only 2 billion. One of the investors is the Chinese billionaire Xu Jiayin, who owns a fortune of 7 billion dollars. He bought a 39 million dollar-house on the bay. The Australian Minister of Finance, Joe Hockey, now forces him to sell it. Why? Because he thinks it is against the national interest. The real reason is political of course. Sydney is becoming too expensive for many people. Citizens can no longer afford a house in this successful city of 5 million inhabitants. One fifth of all property transactions is Chinese now. People are afraid the Chinese are boosting the prices. The average price of a dwelling in Sydney is now 1 million dollars. So a new law forces foreign investors who want to buy a house worth less than 1 million dollars to pay a tax, which doubles if the price exceeds 1 million. For buying agricultural land worth more than 15 million dollars a special permit is needed.
Oscar Garschagen explains that the value of the yuan is rising, while the value of the Australian dollar is weakening. Big Chinese real estate firms like Wanda and Vanke were the first to enter the Australian market. Now the others follow. For the Chinese the US is still the most popular real estate market. (The yield of real estate in Europe, all Chinese think, is far lower). But it also has to do with government control. Many transactions are illegal, because Chinese families prefer to do business with secret banks that operate in networks on a global scale. These illegal banks seem to work with a capital of 3.000 to 5.000 billion dollars. In Australia they can operate relatively easily. And all Chinese know that real estate prices may drop, but not the price of land. Because in Communist China the state owns all the land, Chinese have to buy it abroad. Almost every Chinese dreams of getting rich and live the rest of his life in Australia. In Sydney. Sydney is in trouble. It is getting rich.
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